Cloud spending: A reality check

Organizations worldwide are embracing the cloud, though U.S. and European companies remain leery of the public cloud

We've all seen the vendor hype about organizations moving to the cloud in droves in the name of cost savings, management simplicity, and other cloudy goodness. But are companies really eschewing traditional server rooms and data centers and taking the plunge in the still-nascent cloud space? According to separate research from Gartner and The Uptime Institute, the short answer is yes, tempered with a generous "but."

The combined reports illustrate that cloud adoption is indeed on the rise across the globe, at companies both large and small, though American and European organizations are warier of the public cloud than are their Asian counterparts. Further, the companies building clouds tend to be service providers, telecom companies, and colos; that is, cloud deployment hasn't caught on as significantly in financial, manufacturing, health care, or other such industries.

Traditional enterprise may not be rolling out their own public clouds, but they are investing more heavily in cloud-based services. Gartner expects enterprise spending on public cloud services to grow from $91 billion worldwide in 2011 to $109 billion in 2012. By 2016, enterprise public cloud services spending will reach $207 billion.

"Business process as a service still accounts for the vast majority of cloud spending by enterprises, but other areas like platform as a service, software as a service, and infrastructure as a service are growing faster," said Richard Gordon, research vice president at Gartner.

According to Uptime's recently released 2012 Data Center Industry Survey, cloud deployments have significantly increased globally over the past year: In 2011, 16 percent of respondents said they'd deployed public clouds and 35 percent had deployed private clouds. For this year's survey, 25 percent said they're adopting public cloud and 30 percent said they were considering it. Another 49 percent said they were heading into the private cloud, while another 37 percent were considering it.

Break down those numbers, and a couple of interesting facts emerge. First off, when you remove the technology service providers, colos, and telcos from the sample, leaving only traditional enterprise verticals (financial, manufacturing, government, and so on), cloud computing drops off significantly. "This provides a reality check of sorts: A apart from technology companies who are arguably eating their own dog food, the survey indicates that the broader market is less sanguine about cloud," according to the Uptime Survey.

Second, the public cloud adoption rate in Asia is 52 percent, compared to a 22 percent adoption rate in North America and 28 percent in Europe. In general, the hybrid cloud is enjoying strong growth in the Asian Pacific region. Singapore in particular has worked hard to improve its public cloud infrastructure. By contrast, 50 percent of organizations in the United States and 52 percent in Europe said they're embracing the private cloud; Asia is at 42 percent.

Based on size, 32 percent of large organizations (both public and private sectors) use the public cloud, compared to 19 percent of small organizations and 10 percent of "traditional enterprises." "When layering this categorization upon adoption of cloud or colocation, it became clear that large companies are far more likely to pursue colocation and cloud computing to meet compute demand. This seems to buck the idea that these options are a better fit for small to medium-sized businesses," according to Uptime's survey.

Meanwhile, 65 percent of large organizations said they've deployed private cloud; 39 percent of small organizations and 39 percent of enterprises said they were doing the same.

As to what's driving the cloud adoption:

  • 27 percent of respondents said they were looking to reduce costs
  • 23 percent were aiming to increase scalability
  • 13 percent sought to speed up deployment
  • 13 percent said adoption was driven by customers and users

As to the cloud holdouts:

  • 64 percent cited security concerns
  • 27 percent pointed to compliance and regulatory issues
  • 24 percent played the "high-cost" card
  • 21 percent raised reliability concerns
  • 20 percent noted a lack of internal cloud-management expertise
  • 13 percent said they didn't see a credible case to move to the cloud
  • 12 percent expressed a fear of vendor lock-in
  • 12 percent indicated that no cloud services met their computer demands

This story, "Cloud spending: A reality check," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.

Copyright © 2012 IDG Communications, Inc.

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